It has been about a month since the last earnings report for USA Compression Partners (USAC Quick QuoteUSAC - Free Report) . Shares have lost about 4.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is USA Compression due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

USA Compression Partners Q1 Earnings Beat Estimates

USA Compression Partners reported first-quarter 2024 adjusted net profit of 16 cents per common unit, which beat the Zacks Consensus Estimate of 12 cents. This was due to improved pricing and utilization. The metric also improved significantly from the year-ago quarter's adjusted net loss of one cent per share on the back of higher-than-expected revenue-generating capacity.

The largest independent provider of natural gas compression services generated revenues of $229 million, improving 16.2% from the year-ago quarter’s level and beating the Zacks Consensus Estimate of $226 million.

Adjusted EBITDA increased 17.9% to $139.4 million and came ahead of our estimate of $138.4 million.

Distributable cash flow increased from $62.6 million in the prior-year quarter to $86.6 million. The company reported a net income worth $23.6 million compared with $10.9 million a year ago.

USAC reported operating cash flow of $65.9 million in the first quarter, up from the prior-year quarter’s $42.3 million. Adjusted gross operating margin of 67.3% marked an increase from the year-ago period’s 66.2%.

The company’s revenue-generating capacity increased 7.1% year over year to 3.5 million horsepower, which surpassed the Zacks Consensus Estimate of 3.48 million horsepower. However, the figure came in below our estimate of 3.52 million horsepower.

Further, the average monthly revenue per horsepower rose to $19.96 from $18.19 in the first quarter of 2023 and surpassed our estimate of $19.77.

Meanwhile, USA Compression’s average quarterly horsepower utilization rate came in at 94.8%, up from 92.6% a year ago and exceeded our prediction of 94.1%.

DCF, Cost, Capex & Balance Sheet

USAC’s distributable cash flow available to limited partners totaled $86.6 million (providing 1.41X distribution coverage), up 38.3% from the year-ago level.

Notably, on Apr 11, USAC announced first-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis). The distribution was paid on May 3, 2024, to common unitholders of record as of Apr 22.

The company reported $162.4 million in costs and expenses, up 11.2% from the year-ago quarter’s $146.1 million.

It spent $104.8 million on growth capex. Maintenance capex amounted to $5.8 million.

As of May 31, 2024, USA Compression had a net long-term debt of $2.5 billion.

Guidance

For 2024, USAC anticipates distributable cash flow in the $340-$360 million range. Management expects adjusted EBITDA in the band of $555-$575 million.

The company also anticipates 2024 net income in the $95-$115 million range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

The consensus estimate has shifted 31.58% due to these changes.

VGM Scores

Currently, USA Compression has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise USA Compression has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.